A “Buy Limit Order” is one of the most common stock trading order types that are used by active traders today.A fundamental stock market trading technique is the limit order. Buy and sell limit orders are designed to give the trader a certain degree of “protection” over market volatility.
Definition
According to the Securities and Exchange Commission, a limit order is an order to buy or sell a security at a specific price. A buy limit order is executed at the limit price or lower.
Flexibility
Buy limit orders are placed as either day orders (today only) or GTC orders (Good Till Canceled by the trader).
Considerations
The SEC states that limit orders are not always executed because the market price can quickly surpass the traders limit price before the transaction is executed.
Benefits
Limit orders are especially beneficial when trading highly volatile stocks and stocks with very low trading volumes.